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Searching For A Bargain: Where Contrarians Look After A Multi-Year Bull Market

Mar. 27, 2019 8:45 AM ETALIAF, ASHR, CYSXF, EWI, EWS, FXI, RSX, RSXJ, TAN, TUR, CPD:CA13 Comments
Philip MacKellar profile picture
Philip MacKellar


  • International markets and valuations versus North American markets and valuations.
  • A brief review of beaten up sectors in America along with potential risks and rewards.
  • A brief review of contrary Canadian sectors along with potential risks and rewards.


Twice a year I conduct a screen of North American indexes and a top to bottom review of the existing watch list for Contra the Heard. Though valuations are relatively high, and many industries are near multi-year highs, investors should remember that the stock market is a market of stocks, and there are generally beaten up countries, sectors, or companies out there somewhere.

The goal of the screen is to identify unloved and, hopefully, undervalued opportunities that may be worth further scrutiny. After the latest review, the watch list included 443 US companies, 156 Canadian names, and 52 ETFs. Of those, there is a shortlist of 19 US names, 16 Canadian stocks, and 9 ETFs that I’ll continue to watch closely or research. My hope is that a few of these will make good portfolio candidates in the future.

Before reading further, keep in mind that I will not be discussing in detail the individual securities found during the screening process. Instead, this article will provide a broad overview of the countries, industries, and sectors where many contrary opportunities were found.

International Versus North American Valuations:

Unfortunately for most American investors, prices are high versus historic norms and other countries.

Source: Star Capital’s February 28, 2019 Stock Market Valuation Table

According to Star Capital, the United States is among the world’s most expensive countries, along with India, Denmark, Ireland, and Belgium. Canada’s valuations are in the middle of the pack along with Hong Kong, France, and Taiwan. Today, the most undervalued markets include Turkey, Russia, China, Hungary, Singapore, and Italy.

Investing in these relatively undervalued countries may be rewarding but it is not for the faint of heart. Russia and China rarely make the news for their good behaviour. Both countries are also prone to corruption. This may cast

This article was written by

Philip MacKellar profile picture
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long ALIAF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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